CDW (NASDAQ:CDW) Posts Earnings Results, Beats Estimates By $0.11 EPS

CDW (NASDAQ:CDW) released its quarterly earnings results on Wednesday. The information technology services provider reported $2.91 earnings per share (EPS) for the quarter, topping analysts’ consensus estimates of $2.80 by $0.11, FiscalAI reports. The firm had revenue of $6.57 billion for the quarter, compared to analyst estimates of $6.21 billion. CDW had a return on equity of 50.61% and a net margin of 4.60%.The business’s revenue was up 10.0% on a year-over-year basis. During the same quarter last year, the company posted $2.60 earnings per share.

Here are the key takeaways from CDW’s conference call:

• CDW reported record second-quarter results: net sales rose 10% to $6.6 billion, gross profit increased 6%, and non-GAAP EPS climbed 12% to $2.91. Growth was led by infrastructure modernization, AI readiness, cloud, security, and strong international demand.
• Management raised its full-year outlook, now expecting mid-single-digit gross-profit growth and non-GAAP EPS growth at the high end of the high-single-digit range. The company cited robust written demand, shipping activity, backlog, and expected operating leverage from its Geared for Growth initiatives.
• AI is driving a broad, full-stack opportunity spanning hardware, cloud, security, data, implementation, and lifecycle services. Infrastructure demand is currently leading, while management expects services and recurring managed-services revenue to accelerate as customers move from procurement into deployment and ongoing management.
• Second-quarter gross margin declined 70 basis points to 20.1%, primarily because of mix toward larger enterprise infrastructure orders, which carry lower margins, and weaker services contribution due to deployment timing. Management expects second-half and full-year margins to remain below 2025 levels.
• Adjusted free-cash-flow conversion was only 42% of non-GAAP net income in the first half, below the 80%-90% target, as inventory increased by approximately $400 million to support customer demand and pricing volatility. Management expects working capital to normalize in the second half, but execution will be important.

CDW Price Performance

Shares of CDW stock traded down $4.43 during trading on Friday, reaching $137.53. The company’s stock had a trading volume of 272,691 shares, compared to its average volume of 1,909,218. The business has a 50 day moving average price of $135.78 and a 200-day moving average price of $127.64. CDW has a 12-month low of $97.12 and a 12-month high of $171.55. The company has a market capitalization of $17.57 billion, a P/E ratio of 16.60, a price-to-earnings-growth ratio of 1.86 and a beta of 0.96. The company has a quick ratio of 1.06, a current ratio of 1.17 and a debt-to-equity ratio of 1.97.

CDW Dividend Announcement

The firm also recently declared a quarterly dividend, which will be paid on Thursday, September 10th. Investors of record on Tuesday, August 25th will be paid a $0.63 dividend. The ex-dividend date is Tuesday, August 25th. This represents a $2.52 dividend on an annualized basis and a dividend yield of 1.8%. CDW’s payout ratio is 30.29%.

Analyst Ratings Changes

A number of research firms have weighed in on CDW. Weiss Ratings raised CDW from a “sell (d+)” rating to a “hold (c-)” rating in a research report on Thursday, June 11th. Raymond James Financial set a $150.00 target price on CDW in a report on Wednesday, May 6th. UBS Group cut their price target on CDW from $162.00 to $147.00 and set a “buy” rating for the company in a research note on Thursday, May 7th. Citigroup increased their price target on CDW from $123.00 to $145.00 and gave the stock a “neutral” rating in a report on Monday, July 13th. Finally, Royal Bank Of Canada upgraded shares of CDW to an “outperform” rating and set a $130.00 price objective on the stock in a research report on Wednesday, May 27th. One research analyst has rated the stock with a Strong Buy rating, five have issued a Buy rating and three have assigned a Hold rating to the stock. According to data from MarketBeat.com, the stock currently has an average rating of “Moderate Buy” and an average target price of $147.00.

Insider Activity at CDW

In related news, Director David W. Nelms purchased 18,000 shares of the stock in a transaction dated Wednesday, May 27th. The shares were acquired at an average cost of $111.43 per share, with a total value of $2,005,740.00. Following the purchase, the director directly owned 51,025 shares in the company, valued at $5,685,715.75. This trade represents a 54.50% increase in their position. The acquisition was disclosed in a legal filing with the SEC, which is available through the SEC website. Insiders own 0.82% of the company’s stock.

Institutional Trading of CDW

A number of institutional investors have recently added to or reduced their stakes in CDW. Jones Financial Companies Lllp grew its holdings in shares of CDW by 316.0% in the 1st quarter. Jones Financial Companies Lllp now owns 4,896 shares of the information technology services provider’s stock worth $785,000 after acquiring an additional 3,719 shares during the period. Empowered Funds LLC raised its holdings in CDW by 1.2% during the first quarter. Empowered Funds LLC now owns 18,076 shares of the information technology services provider’s stock worth $2,897,000 after purchasing an additional 216 shares during the last quarter. California State Teachers Retirement System boosted its position in CDW by 0.6% during the second quarter. California State Teachers Retirement System now owns 225,709 shares of the information technology services provider’s stock worth $40,309,000 after purchasing an additional 1,242 shares in the last quarter. BI Asset Management Fondsmaeglerselskab A S boosted its position in CDW by 1,339.7% during the second quarter. BI Asset Management Fondsmaeglerselskab A S now owns 49,380 shares of the information technology services provider’s stock worth $8,819,000 after purchasing an additional 45,950 shares in the last quarter. Finally, State of Tennessee Department of Treasury grew its holdings in CDW by 17.7% in the second quarter. State of Tennessee Department of Treasury now owns 40,927 shares of the information technology services provider’s stock valued at $7,309,000 after purchasing an additional 6,143 shares during the last quarter. Hedge funds and other institutional investors own 93.15% of the company’s stock.

About CDW

CDW (NASDAQ: CDW) is a leading provider of information technology products and integrated solutions for business, government, education and healthcare customers. The company sources and resells hardware and software from major technology vendors and packages those products with professional services, managed services and lifecycle support. Its offerings span IT infrastructure, cloud and data center solutions, cybersecurity, networking, unified communications, endpoint devices, and software licensing and procurement services designed to simplify IT operations for customers.

CDW combines a broad product portfolio with consultative sales, implementation and technical support capabilities.